J une 2004 I S TRATEG IC F INANCE 49

IF YOUR COMPANY HAS SUCCESSFULLY IMPLE-

MENTED A STRATEGIC PLAN, then you’re defi-

nitely in the minority. The real success rate is only

10% to 30%. This low rate is discouraging, especially

since a growing number of companies in recent years

have invested considerable resources to develop

strategic planning skills.

Strategic Management

implementing strategy

T A P I N T O T H E P O W E R O F F O U R K E Y

F A C T O R S T O D E L I V E R S U C C E S S .

B Y A N D R E A S R A P S

implementingstrategy

Companies obviously need to improve strategy imple-

mentation activities, but the pace of these activities and

the implementation itself have many problems. Primary

objectives are somehow forgotten as the strategy moves

into implementation, and the initial momentum is lost

before the company realizes the expected benefits. The

cause isn’t easy to explain, but it can be attributed to a

variety of problems.

Traditional strategy implementation concepts overem-

phasize structural aspects, reducing the whole effort to an

organizational exercise. Ideally, an implementation effort

is a “no boundaries” set of activities that doesn’t concen-

trate on implications of only one component, such as the

organizational structure. When implementing a new

strategy, it’s dangerous to ignore the other components

because strategy implementation requires an integrative

point of view. You need to consider not only the organi-

zational structure, but the soft facts as well—the cultural

aspects and human resources perspective. Taking into

account both the soft and hard facts (like turnover, oper-

ating profit, profitability ratios) ensures that cultural

aspects and human resources receive at least the same sta-

tus as organizational aspects. Altogether, this integrative

interpretation allows you to develop implementation

activities that are realistic.

It might seem like strategy implementation is an

insurmountable obstacle. It isn’t. But you should

concentrate on four key success factors, which Figure 1

illustrates: culture, organization, people, and control sys-

tems and instruments.

1 . CULTUREEach organization possesses its own culture, i.e., a system

of shared beliefs and values. The corporate culture creates

and, in turn, is created by the quality of the internal envi-

ronment; consequently, culture determines the extent of

cooperation, degree of dedication, and depth of strategic

thinking within an organization. An important element

in this context is the motivation of the employees, which

determines the potential and force for a significant

change within the corporation’s system. Before change

can occur, the organization and its cultural values have to

be “unfrozen” to understand why dramatic change is even

necessary. While the need for change may be apparent to

the top executives, it isn’t always obvious to the rest of the

organization.

Top management’s principal challenge in the cultural

context is to set the culture’s tone, pace, and character—

to see that it’s conducive to the strategic changes that the

executives are charged with implementing. When imple-

menting strategy, the most important facet is top man-

agement’s commitment to the strategic direction itself. In

fact, this commitment is a prerequisite for strategy imple-

mentation, so top managers have to show their dedica-

tion to the effort. At the same time, this shows a positive

sign for all affected employees.

50 STRATEG IC F INANCE I J une 2004

STRATEGYIMPLEMENTATION

CULTURE ORGANIZATION

PEOPLE CONTROL SYSTEMS&

INSTRUMENTS

Figure 1: Strategy implementation’s key success factors

To implement strategy successfully, senior executives

must not assume that lower-level managers have the same

perceptions of the strategic plan and its implementation,

its underlying rationale, and its urgency. Instead, they

must assume they don’t, so the executives must persuade

employees of the validity of their ideas.

2 . ORGANIZAT IONYou should consider two aspects of your organization—its

structure and its decision-flow processes. Structure

deploys accountabilities so the company can achieve its

goals and objectives and, ultimately, its mission. The

enterprise’s mission and goals are the general and specific

accountabilities of top management. The goals then are

subdivided into objectives that are delegated to the next

level of executive management. In effect, a strategy defines

both the firm’s direction and top management’s job.

Decision-flow processes, however, are the vehicles com-

panies use to integrate results into coherent patterns for

developing, implementing, and controlling decision mak-

ing. Research studies indicate that less than 5% of the typ-

ical workforce comprehends their organization’s strategy.

Without understanding the general course of strategy,

employees can’t contribute to an effective implementation.

What’s necessary to help reach this goal is a higher degree

of transparency in the decision-making process.

One reason strategy implementation processes fre-

quently result in problems or even fail is that the assign-

ments of responsibilities are unclear. Who’s responsible

for what? To add to this problem, responsibilities are dif-

fused through numerous organizational units that tend to

think in only their own department structures. That’s

why cross-functional relations are critical to an imple-

mentation effort. Bureaucracy makes this situation even

more challenging and can make the whole implementa-

tion a disaster.

To avoid power struggles between departments and

within hierarchies, you should create a plan with clear

assignments of responsibilities regarding detailed imple-

mentation activities. Through this approach, responsibili-

ties become evident, and you can avoid potential

problems before they arise.

3 . PEOPLEHuman resources represents a valuable intangible asset,

and recent research indicates that it is progressively

becoming the key success factor within strategy imple-

mentation projects. In the past, one of the major reasons

why strategy implementation efforts failed was that peo-

ple were conspicuously absent from strategic planning.

This just doesn’t work. Employees have to be considered

part of strategy implementation in general. Implementing

strategic change requires the confidence, cooperation,

and competencies of the organization’s technical and

managerial people, so the continual development of a

company’s vital asset—human resources—is a very high

priority.

Another priority is managing change. It’s a great chal-

lenge to deal with potential barriers to change because

implementation efforts often fail when you underestimate

these barriers. Experience shows that barriers against the

implementation of the strategy can lead to a complete

breakdown of the strategy.

These barriers are psychological issues, ranging from

delay to outright rejection, and companies need to pay

more attention to them. After all, strategy implementation

consists mostly of psychological aspects, so by changing

the way employees view and practice strategy implemen-

tation, senior executives can effectively transform change

barriers into gateways for a successful execution.

Since change is part of the daily life within an organi-

zation, you need to emphasize communication regarding

the changes to push the implementation process forward.

One problem: The required communication with em-

ployees about the strategy implementation is frequently

delayed until the changes have already crystallized. My

recommendation? Focus on two-way communication

because it solicits questions from employees. In addition,

communication should cover the reasons employees are

performing new requirements, tasks, and activities

because of the strategic implementation.

This type of communication about organizational

developments should take place both during and after an

organizational change. It’s essential to communicate infor-

mation to all levels, and don’t forget that the way you pre-

sent a change to employees greatly influences their

acceptance of it. To deal with this critical situation, you

J une 2004 I S TRATEG IC F INANCE 51

Communication should cover the reasons employees

are performing new requirements, tasks, andactivities because of the

strategic implementation.

must develop an integrated communications plan. Such a

plan is an effective vehicle for focusing employees’ atten-

tion on the value of the selected strategy. Figure 2 illus-

trates a communications plan that will market the

implementation in such a way as to create and maintain

acceptance. It’s indeed a big challenge to communicate

this plan effectively and in a way that everybody under-

stands it.

Beyond change management and communication, you

have to consider the behavior of individual employees.

Individual personality differences often determine and

influence implementation, and different personality types

require different management styles. For the purpose of

strategy implementation, you should create a fit between

the intended strategy and the specific personality profile

of the implementation’s key players in the various depart-

ments of the organization.

Next is teamwork. Teamwork plays an important role

within the process of strategy implementation. When it

comes down to implementation activities, however, this is

often forgotten, even though it’s indisputable that teams can

play an important part in promoting the implementation.

To build effective, cohesive teams within strategy

implementation, you should consider using the Myers-

Briggs typology, which has proved to be a useful tool in

determining personality differences. Recognizing different

personality types and learning how to manage them

effectively is a skill that you can learn. In fact, more than

one million Myers-Briggs Type Indicators (MBTI™) sur-

veys are performed each year in corporate settings for

team building and management development. More than

any other field of activity, implementation is the area that

benefits most from a trained and personality-sensitive

management team.

To generate acceptance for the implementation, middle

managers must help formulate the strategy. More often

than not, however, middle managers and supervisors have

important and fertile knowledge that’s seldom tapped in

strategy formulation. As long as these managers are a part

of the strategy process, they will be more motivated

because they see themselves as an important part within

the process. You need to make sure that happens.

As a result of involving managers and supervisors, you

can increase your chances for a smooth, targeted, and

accepted strategy implementation. That’s why involving

employees is an important milestone to making strategy

everyone’s everyday job. Without understanding the general

course of strategy, employees can’t contribute to an effective

strategy implementation. That’s exactly why the involve-

ment of middle managers seems to be appropriate—to

increase the general strategic awareness. At the same time, it

promotes an integrative understanding of the strategic

direction and helps to accomplish a strategic consensus.

4 . CONTROL SYSTEMS AND INSTRUMENTS An essential question for managers is how to assess per-

52 STRATEG IC F INANCE I J une 2004

Figure 2: Issues to be addressed in the communications plan

PARTICIPANTSWho will be involved

in the communicationprocess?

MESSAGEWhat needs to be communicated?

TIMINGWhen will the

communication need tobe placed?

MEDIAWhat methods are

adequate for communicating?

MILESTONESHow and when areresults measured?

WORK PLANWhat time and effort

are required?

formance during and after the implementation. This

assessment or control function is a key aspect of the

implementation processes.

In order to provide top management with reasonable

assurance that strategic initiatives can be executed and

are, indeed, being implemented as intended, a control

system is required to develop and provide the necessary

information. Such a control system focuses on critical

issues. For example, one of the most critical points within

strategy implementation processes is time restrictions.

The problem? Many executives underestimate the

amount of time needed and don’t have a clearly focused

view of the complexities involved when implementing

strategies. Basically, it’s difficult enough to identify the

necessary implementation steps and even more difficult

to estimate an appropriate time frame, so you have to

determine the time-intense activities and harmonize

them with the time capacity. One way to figure this out is

through fine-tuning with the affected divisions and the

managers responsible for them. In addition to the prob-

able time frame, you should calculate an extra buffer for

unexpected incidents.

To facilitate the implementation in general, you should

use tools to support the processes adequately. Two imple-

mentation instruments help here: the balanced scorecard

(BSC) and supportive software solutions.

A popular and prevalent management system, the BSC

considers financial as well as nonfinancial measures to

translate a company’s strategic objectives into a coherent

set of performance measures. When it comes to meeting

the criteria of a strategy-implementation instrument, it’s

an excellent fit. The individual character of each balanced

scorecard ensures that the company’s strategic objectives

are linked to adequate operative measures. As a conse-

quence, it provides even more than a controlling instru-

ment for the implementation process—it offers a

comprehensive management system that supports the

steering of the process. A strategic planning system can’t

achieve its full potential until it’s integrated with other

control systems like budgets, information, and reward

systems. The balanced scorecard provides a frame to inte-

grate the pieces of the strategic planning initiative and

meets the requirements that the strategic planning system

itself can display.

In the context of implementing strategies, companies

neglect software solutions. IT support is becoming more

and more important because information tools must be

available and adequate to allow strategic decision makers

to monitor progress toward strategic goals and objectives,

track actual performance, pinpoint accountability, and—

most important—provide an early warning of any need

to adjust or reformulate the strategy. Unfortunately, this

seems to be limited to enterprise resource planning (ERP)

systems, which are prevalent in the operating environ-

ment of a company’s day-to-day business.

The strategy implementation perspective demands sys-

tems with criteria different from those of conventional

systems. How well the system can monitor and track the

implementation process should be the center of interest.

In the past, implementation-related activities were

tracked manually or launched on an ad hoc basis so that

there was a lack in mandatory installed business process-

es. The supportive application of adequate software solu-

tions can be more than helpful to improve the quality of

strategy implementation. In addition, a software solution

is a starting point to define clear assignments of responsi-

bilities throughout the organization’s implementation

processes. The advantage is that the responsibilities can

be defined within a software solution and the responsible

managers have to commit themselves to specific goals.

Basically, this is an excellent approach to track the pro-

gress of the implementation and the individual managers’

achievement of objectives.

STRATEGY IMPLEMENTAT ION—AN EN IGMA?Curiously, some managers consider strategy implementa-

tion a strategic afterthought. Although creative chaos can

help formulate strategy, a more administrative strategy

implementation demands discipline, planning, motiva-

tion, and controlling processes. The implementation

process normally demands much more energy and time

than mere formulation of the strategy.

It’s worth the effort. An efficient strategy implementa-

tion has an enormous impact on a company’s success.

Basically, a well-formulated strategy can only generate a

sustainable added value for the company if it is imple-

mented successfully, so regardless of the intrinsic merit of

a particular strategy, it can’t succeed if an effective imple-

mentation procedure is missing. The four key success fac-

tors can serve as your guide. ■

Andreas Raps, Diplom-Kaufmann (MBA equivalent),

Ph.D., works as a strategic management consultant in

Germany. He has experience in various strategic projects,

especially in the automotive supply industry. His doctoral

thesis deals with strategy implementation’s general success

factors. You can reach him at andreas.raps@albizia.de or in

Germany at +49 172 826 40 90.

J une 2004 I S TRATEG IC F INANCE 53